Futu Holdings Limited (「Futu」 or the 「Company」) (Nasdaq: FUTU), a leading tech-driven digital brokerage and wealth management platform, has released the first 「Futu Investing White Paper - Market Trends & Trading Behavior of Retail Investors」 (「The Report」). It finds that the individual investors were more agile in investment strategy in response to the heightened market volatility, pivoting from stocks to ETFs (including ETFs and REITs, referred as 「funds」 below) and bonds in the first half of 2022(「H1 2022」). During the survey period, the overall investment portfolios became more diverse with a notable increase in transaction frequency.   

Trading frequency rises in H1: HK investors trade at least once a day

According to the Report, the overall risk appetite in all 3 surveyed markets – Hong Kong SAR (HK), Singapore (SG), and the US - has declined significantly, under the rising inflationary pressure and global market uncertainties. Investors from HK, the US, and SG markets recorded a decline in stock weighting, dropping 4.3, 4.4, and 3 percentage points as compared to the levels at the end of 2021. 

Investors opted to diversify their portfolios with funds and bonds, with the proportion of fund holdings in portfolios climbing to 8.4%, 13.2%, and 13.6% for investors in HK, the US, and SG, rising 1.5, 4.4, and 3.3 percentage points respectively as compared to the result of the 2021 year-end. 

All markets saw a meaningful increase of trading frequency amid the H1 market fluctuations. HK investors traded 1 time on average per day, more actively than the US investors (0.43 times) and SG investors (0.35 times) did. The three groups of investors executed 20.5%, 26.5% and 52.2% more trades in H1 2022 than that of H2 2021, respectively. 

Gen X investors maintain nearly 90% stock position, while Gen Z investors move into funds and bonds

The Gen X demographics, the oldest age group studied, were revealed to be the greatest risk-seekers, as their stock position remained the highest among all three generations studied. Furthermore, their investing patterns changed only slightly, with a modest 2.8 percentage points decrease in stock investment value (to 89.4%, on June 15, 2022), compared to December 31, 2021.

On the contrary, Gen Z group investors were the most risk-averse, and their equity investments significantly declined (-8.6 percentage points), from 85.3% on December 31, 2021, to 76.7% on June 15, 2022.

Gen Z investors allocated 14.9% and 7.7% of their positions to funds and bonds respectively, the highest level among all three generations. In conclusion, the youngest generation held the most diversified portfolios of all. 

Female investors’ investments are more diversified with an 11% increase in options trading

In 2022 H1, every HK male investor traded 1.24 times daily, 85.4% higher than female investors whose average trading frequency was 0.67 times per day. Both male and female investors in shared similar investment preferences, with stocks (around 87%) being the dominant asset, followed by funds. Female investors in Hong Kong tended to allocate more weighting to bonds in their portfolios. As of June 15, 2022, HK female clients’ portfolios are composed of 5% bonds, 1.6 percentage points higher than HK male clients. At the same time, the composition of bonds is also significantly increased by 4 percentage points as compared with the 2021 H2. 

HK and SG female investors executed more options trading during H1 2022. The daily stock options trades by HK and SG female investors increased by 11% and 21% respectively, compared to H2 2021.

US stocks continued in the spotlight: Tesla leads most-traded stocks

From turnover perspective, US stocks led the top most-traded stocks for investors from HK, US and SG markets. In H1 2022, Tesla listed the most traded stocks in terms of daily turnover, followed by Tencent and NVIDIA for the HK market. 

Provoked by Elon Musk’s proposed acquisition, Twitter became the most concerned stocks across HK investors, adding 42,366 followers on Futubull. 

Ms. Christy Chan Hoi Yan, Senior Analyst of Futu Securities, said, 「In the first half of 2022, investors actively hedged the heightened market volatility with portfolio rebalancing and diversification for better investment resilience. On the upside, the younger generation and female investors tended to be more flexible in allocating their assets, injecting velocity into the capital market. Looking into the second half, the market will remain volatile facing the pressures from the global supply chain and high inflation, yet the volatilities are expected to ease if the Fed’s interest hikes are within market expectations. On the other hand, with the support of the international environmental agreement, new energy stocks will be promising in the second half.」 

The Futu Investing White Paper is Futu’s first white paper on retail investment trends, with the aim to reveal its almost 20 million investors’ evolving trading behavior and investment strategies in response to the heightened market volatility from market, gender and generation lens. The Report well represents the retail market sentiment worldwide that will help markets to better understand the changing investment behaviour, strategies and preferences. 

Mr. Leaf Hua Li, founder of Futu Securities, said, 「Futu's millions of users not only demonstrate that we are the choice of partner for many investors, but also empower us to produce barometers for the market to understand overall retail investment trends. As a global technology financial service platform, Futu has been contributing to creating a better investment environment. We will continue to work with global investors to seek better returns and lead the change. "